$200m CVFF Saga: Amaechi Opts For Ship Acquisition Instead Of Fund Disbursement

Brimming with anxiety for the expeditious disbursement of the $200million Cabotage Vessel Finance Fund (CVFF), the Minister of Transportation, Hon. Rotimi Amaechi suggested that the entire fund be used to acquire two commercial vessels, a development which is a breach of the Nigerian Maritime Administration and Safety Agency (NIMASA) Act 2007.

The 2007 Revised CVFF Guidelines found in NIMASA Act 2007, Section 3.2 (VII) states that “… Each qualifying individual applicant or several applicants whether related by management or ownership can only be availed a facility not exceeding $25million or its equivalent”

Amaechi at a meeting with ship-owners and other stakeholders to discuss CVFF, had indicated that the CVFF could be utilized to get large vessels that would benefit from economies of scale and absorb thousands of Nigerian seafarers. However oil tankers often sold second-hand; such as 80,000–105,000DWT was around $64Million now goes for over $75Million in 2020 and 250,000–280,000DWT $180Million in today’s market from $120Million in 2005.

Although the changes in prices of vessels between 2006 and 2020 gives credence to the need for a review of CVFF guidelines, the Minister seems to be more interested in disbursement guidelines and mitigating risks of abuse of the fund.

Speaking with MMS Plus last week, the Executive Director, Cabotage Services, NIMASA, Mr. Gambo Ahmed also stressed that it would be a breach of the CVFF guidelines for any applicant to receive more than 50% of the sum required for the vessel to be acquired.

“The current guidelines stipulate that the fund should cover a maximum of 50% of the cost of the vessel while the Primary Lending Institutions (PLIs) will do a minimum of 35% and the entrepreneur contributes a minimum of 15%. Where the operator decides to contribute more than 15%, it will only reduce the funds from the banks. CVFF can’t go beyond 50%” Gambo said.

Meanwhile, there seems to be a brewing crisis among ship owners following the poise of the Minister of Transportation at the strategic meeting on the disbursement of the $200million CVFF and his selection of a committee to proffer disbursement guidelines.

A former Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Barr. Temisan Omatseye stormed out of the meeting in anger as he quipped, “Does Amaechi think that we are children? Why would he say that the issue of CVFF review isn’t part of the terms of reference to be discussed here? Does he think he can bully ship-owners this way? Look at the way everybody is keeping quiet. I’m resigning from the committee. I won’t be a part of this.”

Omatseye angrily told a NIMASA staff as he walked out, that he would resign from all duties on the Cabotage Implementation committee and quit all connections with the agency.

The Minister of Transportation was emphasizing that he wouldn’t let anyone access the CVFF fund if they had no proof of vessels owned as he would rather abscond with the N72billion than allow someone else do so.

It wasn’t just Amaechi’s words but his hush and brash disposition that caused the former NIMASA Director General to walk out, while several ship-owners murmured at the meeting.

It took about fifteen minutes for a top delegation of NIMASA members of staff to convince Omatseye to return having proceeded to the Eko hotel lobby from the meeting hall.
The NIMASA members of staff  pleaded passionately saying, “Oga, you have come too far to leave us now. Even if you are dissatisfied with the way things have played out today, we can work to correct things. Please stay back so that it won’t be on your record that you walked away. Please sir!

Omatseye, who is also a member of the committee saddled with the onus of developing the disbursement guidelines for CVFF, later returned to the meeting room for the latter part of the meeting.

Amaechi’s handpicked members of the committee to develop the guidelines for CVFF guidelines and this apparently caused discomfort and murmurings among the stakeholders as top players like the President of the Ship Owners Association of Nigeria (SOAN) was left out.

Although the SOAN President was disappointed with the development, he kept his cool and told MMS Plus newspaper that he would meet with the Minister the following day.

“I’m dissatisfied with a lot of things here today. However, I already have an appointment with the Minister tomorrow. I don’t want to discuss these things with the press. They are matters that could be addressed after my meeting with the Minister”, he told our correspondent.

Other stakeholders also described the institution of the committee as a merry-go-round.

A shipping expert who pleaded anonymity, said; “Na today we begin see committee? As a journalist go online and find out how many committees have been set-up for guidelines on disbursement of CVFF”

According to him, this process may take not less than six months to get the guidelines developed before another unspecified duration would be required to get the Minister’s approval and subsequently the approval of the National Assembly.
Speaking with journalists at the event, the Minister said this would be the first time the CVFF would be applied to the ship owners.

His words: “What we have agreed is to set up a committee that will come forward with the proposed guidelines that I will send to the National Assembly. The committee for developing the guidelines would be chaired by the Director General of NIMASA, Dr. Dakuku Peterside”
“In the past, the money was applied to building a Maritime University and faculties of maritime in other universities across the country. This would be the first time the money is applied to ship owners directly”

As part of efforts to mitigate the risk involved in the disbursement, the Minister stated that financial institutions would be involved and the fiscal risk would be borne by the lending institutions.

“The banks will be involved in developing the criteria for the disbursement of the fund, so the risk would be borne by the lending institutions”, the Minister said.
Meanwhile, the Chairperson, Nigerian Ship-owners Forum and Board of Trustee (BoT) member, MMS Woman of Fortune Hall of Fame (WoFHoF) Initiative, Barr. (Mrs.) Margaret Orakwusi, observed that ship-owners from other countries have access to funding at 2% interest rate, she admonished that CVFF be disbursed to enable Nigerian ship-owners compete favourably with their contemporaries.

Orakwusi expressed delight at the development and Amaechi’s focus to get CVFF disbursed, stating that she was looking forward to the disbursement of the fund and a better shipping industry where the fund would be utilized judiciously.
She canvassed for a long spread of the interest rate on CVFF, noting that ships last for thirty years and more.

 “It should be single digit interest and a lower figure for the single digit. There would be new guidelines and a new committee has been set up to develop the guidelines. I suggest that we should be patient to see what the committee comes up with as the guidelines”, she said.